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January 18, 2011

TD Ameritrade's Fiscal Q1: Income Rises, Sales Beat Estimates

Net new client assets for the online broker were $9.7 billion, a jump of 11% over last year’s results

TD Ameritrade’s parent company said Tuesday that its net income was $145 million, or $0.25 a share, in the quarter ended Dec. 31, 2010, up from $123 million, or $0.23 cents, a year earlier.

Revenues in the fiscal first quarter were about $656 million, beating analysts’ estimates of some $648 million and last year’s same-quarter sales of nearly $625 million.

The company’s shared traded up about 2% on Tuesday afternoon near $21.

According to TD Ameritrade, 51% of its net revenues were asset based in the three months ending Dec. 31. Asset-based sales were $334.7 million in the firm’s fiscal first quarter, up from $284.2 million last year and $324.1 million in the previous quarter.

Transaction and commission fees in the last three months of 2010 were $292.7 million, down from $309.4 million a year ago, but up from $250.0 million in the earlier quarter.

Investment-product fee revenue – a subset of asset-based sales -- rose to $40.7 million from $29.4 million a year ago and $36.3 in the prior quarter.

“We continue to execute well on our strategy, as evidenced by strong performances in both the retail and institutional sides of our business,” said Fred Tomczyk (left), TD Ameritrade Holding Corp. President and CEO, in a press release.

Net new client assets were $9.7 billion, an increase of 11% over last year’s $8.7 billion and a jump of 61% from $6.0 billion in the previous quarter.

Average client trades per day were about 372,000 in the first fiscal quarter, a slight drop from 379,000 in the year-ago period but a big move up from 318,000 in the three months ending Sept. 30, 2010.

The number of new accounts also declined to 164,000 vs. 180,000 a year ago.

Client assets of roughly $386.4 billion were 21% higher than $318.6 billion in assets last year and 9% higher than the previous quarter's $354.8 billion.

"Net new assets were at the top of our forecasted range and interest rate sensitive assets are at record levels, positioning us well for an improved rate environment," said Executive Vice President and CFO Bill Gerber. "In addition, our strong cash position enabled us to effectively return 55% of our net income to shareholders through a share buyback and recently announced quarterly dividend."

In addition, TD Ameritrade’s operating margin declined to 35.7% from 38.5 % a year ago. Its average revenue per trade was $12.39, down from $12.98 in the year-ago period but up from $12.29 in the previous quarter.

Also on Tuesday,online-brokerage rival Charles Schwab said its Advisor Services assets improved 11% year over year to $649.9 billion in the fourth quarter, a 7% increase over third-quarter results. Total client assets at Schwab were $1.6 trillion.

And net new assets for Advisor Services were $16.4 billion in the fourth quarter, a 27% jump over the same year-ago period and a 105% increase over the third quarter. They included $1.5 billion in assets from Schwab’s acquisition of Windhaven in the fourth quarter of 2010. Across the company, net new assets were $26.4 billion.

The number of active brokerage accounts at Schwab neared 8 million, a 4% improvement vs. last year and a 1% jump vs. the third quarter of 2010.

The number of clients' daily average trades totaled 395,500 in the fourth quarter, up 2% from the same year-ago period and a jump of 12% from the third quarter.

Average revenue per trade at Schwab dropped 11% year over year in the fourth quarter to $12.07, a 2% decline from the third quarter.